Macroeconomics (MindTap Course List)
10th Edition
ISBN: 9781285859477
Author: William Boyes, Michael Melvin
Publisher: Cengage Learning
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Chapter 10, Problem 3E
To determine
To illustrate:
The hypothetical economy graphically. Also, show the effect of an increase in autonomous saving.
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Draw a graph representing a hypothetical economy. Carefully label the two axes, the S + T + IM curve, the I + G + EX curve, and the equilibrium level of the real GDP. Illustrate the effect of an increase in the level of autonomous saving.
What does it mean by the logic:
When output is too low, what needed is an increase in demand for goods and services. Investment is one component of demand, and saving equals investment. Therefore, if the government could just convince households to attempt to save more, then investment and output would increase.
Please explain how a rise in the household saving rate can cause a fall in GDP?
Chapter 10 Solutions
Macroeconomics (MindTap Course List)
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- In the long run, what happens to consumption in the economy when people are saving less? a) remains the same b) cannot tell from the graph c) decreases d) increasesarrow_forwardEconomists in Funlandia, a closed economy, have collected the following information about the economy for a particular year: Y = 10,000; C = 6,000; T = 1,500; G = 1,700. The economists also estimate that the investment function is: I =3,300 –100r where r is the country’s real interest rate, expressed as a percentage. Calculate private saving, public saving, national saving, investment, and the equilibrium real interest ratearrow_forwardGraphically illustrate (draw) and explain the effect of a sustained increase in savings on the growth of output (Provide explanations)arrow_forward
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